The United Kingdom Onshore Operators Group (UKOOG) has published guidelines on good industry practice for onshore shale gas exploration and appraisal operations (the Guidelines).
The Guidelines address issues which are specific to high volume hydraulic fracturing. Existing Oil and Gas UK guidance and Health and Safety Executive (HSE) guidance on well integrity also apply. In addition to particular operational risk management steps, the Guidelines recommend specific ways to promote increased public confidence and awareness. These include early stakeholder engagement and the public disclosure of fracking fluid composition.
The Guidelines are not legally binding and recognise that best practice will continue to evolve. They were developed with input from the key regulators and so are likely to be seen as indicating good practice.
- Background to the Guidelines
The UK government recently announced that exploratory fracking for shale gas would be allowed to resume in the UK (see our e-bulletin of 19 December 2012 for further detail). In his Ministerial Statement accompanying the announcement, Edward Davey emphasised the important role that good industry practice would have in minimising the impact of operations:
"I consider that the consistent application of good practice by the industry, supplemented by the additional action to control seismic hazards….will ensure that there will be no unacceptable damage to the environment, or threat to the health of local residents, or interference with their lives [caused by exploration operations]."
The Guidelines are not legally binding. They note that they do not seek to deter operators from adopting an alternative approach to managing well integrity, fracturing operations or environmental management to suit particular circumstances (if appraised as more suitable). They are aimed at helping operators fulfil their statutory duties to ensure that wells are designed, constructed and operated to prevent in so far as is practicable unplanned escapes of fluids and to keep health and safety risks to a level which is as low as reasonably practicable.
The Guidelines relate only to the exploration and appraisal phases of onshore shale gas fracking operations and recognise that they will need to be reviewed before shale gas production commences. They are to be read in conjunction with the relevant legislation and industry and regulatory guidance, and build on the Well Integrity Guidelines issued by Oil and Gas UK. The Guidelines themselves focus on the additional issues which may arise in respect of onshore shale gas extraction.
The HSE, the Environment Agency, the Scottish Environment Protection Agency and the Department for Energy and Climate Change all provided input to the Guidelines, which were developed by a group of operating and service companies.
- Operational risk management
- Groundwater isolation: Operators should ensure groundwater is adequately isolated through well design which incorporates adequate cement design and casing depth, and which takes account of the risk of deformation due to seismic activity. Groundwater quality and well integrity should be monitored throughout operations, and plans should encompass decommissioning of the well.
- Fracture Containment: Operators should develop a Hydraulic Fracturing Programme (HFP) describing the control and mitigation measures for fracture containment and any potential induced seismicity. The HFP should take account of local geology, aquifers and well features. An outline HFP should be prepared prior to the application for planning consent and then replaced by a more detailed HFP once further data is available.
- Monitoring Seismic Activity: Site specific surveys should be carried out prior to hydraulic fracturing and seismic activity monitored throughout operations in accordance with seismicity risk assessment and mitigation measures included in the HFP. A traffic light system categorising seismic activity and setting out appropriate responses should also be implemented. This system should be triggered by smaller induced seismic events which may be an indication of, or precursor to, a larger induced seismic event. Although the Guidelines do not specify the precise level of the trigger, the Ministerial Statement had provided that magnitude 0.5ML should be a "red light" event, meaning activity should be suspended pending investigation into the cause of the relevant event and any steps required to mitigate the risk of further events. This was suggested as a conservative starting point following the investigation into Cuadrilla's Preese Hall tremors (see our previous ebulletin).
- Fracking Fluids: Water usage should be carefully monitored, and water from flowback fluids re-used where practicable. Operators should collaborate on the development of best practices in this area, particularly with a view to the development of fracking fluids and additives with the least environmental risks.
- Public confidence
When announcing the Guidelines, the UKOOG CEO Ken Cronin noted that they were part of a wider bid to reassure the public about the safety of fracking, stating that:
"We have a very significant source of resources in the ground and it is important that the industry works with all stakeholders to show it can access shale in an environmentally sensitive but also economic way,..."
The Ministerial Statement had emphasised the need for early engagement with local communities. The Guidelines provide that this should begin in advance of operations, and where possible before any application for planning permission, and involve a broader engagement with stakeholders than is required by the current planning process. Operators should also seek to maximise local economic benefits eg by considering local employment and contractors where possible.
The Guidelines state that transparency is vital to public confidence. They exhort operators to publically disclose (through UKOOG's website) all chemical additives to fracking fluids on a well by well basis, as well as regulatory authorisations for fracking fluids and whether or not they are hazardous, chemical safety data and maximum concentrations and volumes, and the reason for using those additives in the fracturing process. The Guidelines also provide for the collection, and availability for public disclosure, of information relating to water supply and use, flowback water storage and disposal methods, geology, well fracturing design, induced seismicity levels, and also for post-fracturing reports produced by the operator. They also recommend disclosing volumes of shale gas recovered and the associated emissions.
In some areas the Guidelines also recommend extra precautions to grow public confidence. For example usual practice for independent oil and gas well examination is for an examiner to use primarily documentary evidence, whereas UKOOG recommends that operators should arrange for the well examiner (at his/her discretion) to carry out onsite inspection during certain well integrity and fracking operations.
- Future development
The Guidelines are timely since results of the British Geological Survey’s (BGS) assessment of UK shale reserves in the northwest of the UK are expected to be published this month. Media reports suggest it will vastly increase BGS's previous estimate of 5.3 trillion cubic feet, which may encourage further exploration activity. Parliament's Select Committee is also expected to publish its report on the impact of shale gas on energy markets in the coming weeks. This follows the announcement in the Chancellor of the Exchequer's 2013 Budget of new measures designed to promote the industry, including a shale gas field tax allowance and the production of technical planning guidance on shale gas by July 2013 (see our e-bulletin of 20 March 2013 for further detail).
The Guidelines also come at a time when the European Commission is in the process of formulating its own views on the need for environment and safety regulation of the industry. Evidence of existing good practice in the UK might, one would hope, be taken on board by the Commission in developing its own proposals which are expected later this year.
The Guidelines are available here.